Judge approves $10 million Stanford expense fund

Published 5:00 am, Thursday, March 26, 2009

A federal judge approved a motion by Stanford Financial Group’s court-appointed receiver to set aside a $10 million fund for future expenses.

U.S. District Judge David Godbey approved the shift of the funds currently held in an account with clearing bank Pershing to a Stanford account controlled by the receiver, Dallas attorney Ralph Janvey. The funds can be used to reimburse expenses of the receiver and the firms working for it.

They still have to submit invoices for the judge to approve before withdrawing any of the funds.

“Payments of fees and expenses to me and my team will be submitted to the court for its review and approval, and payments may be made only from assets of the receivership estate,” Janvey said in an e-mail interview with the Chronicle last week. “This is a complicated case and the total expenses will be large, as they would be in any case of this size and nature.”

As a clearing firm, Pershing executed securities transactions for Stanford customers and had custody of their brokerage accounts. Under the terms of the original Stanford-Pershing agreement, the $10 million was set aside for Pershing to draw from if Stanford failed to meet its obligations.

Under the order Pershing retains the right to receive payment if Stanford owes Pershing money.

Also on Wednesday Janvey asked the judge to require law firm Hunton & Williams to turn over records on all of the work it did for Stanford, including the Caribbean bank at the heart of an alleged Ponzi scheme, and work it did for Stanford Financial Group Chairman R. Allen Stanford.

The Richmond, Va.-based law firm agreed to provide files related to Stanford businesses in the U.S. but turned down the request for information related to non-U.S. businesses and its work for Allen Stanford, according to filings.

“The Hunton & Williams law firm has declined to relinquish possession and control of records that are part of the receivership estate,” said Janvey. “Information regarding valuable assets belonging to the bank and other offshore Stanford entities may be found in the files.”

According to Bloomberg News, Hunton & Williams represented Stanford International Bank when it was sued in the U.S. in 2002 by a Mexican investor whose assets in the bank were seized by U.S. authorities as part of a drug-trafficking and money-laundering probe. The lawsuit, in which the investor sought to hold Stanford responsible for the seizure, was dismissed in 2003 by U.S. District Judge Federico Moreno in Miami. He ruled the court lacked jurisdiction over the bank, based in the Caribbean island nation of Antigua and Barbuda.

Filings indicate the firm also did legal work for Stanford on a $40 million loan to the government of Antigua and Barbuda, an investigation by Florida’s Office of Financial Regulations and a potential land acquisition of a resort property in Grenada.